This Week’s Top ETF Buys

The holiday season should bring considerable gains to stocks

There are certain times during the year that I feel very comfortable being aggressive in the market. We are entering one of those periods whereby stocks are likely to make considerable gains. Can you say “Santa Claus rally?”

I am very encouraged by what I am seeing on the retail front. I think investors can expect a strong selling season that will wipe away the last remnants of worry. The last two weeks we have seen consolidation in the market, and that consolidation may turn out to be very bullish for stocks heading toward the end of the year.

With that in mind I want to make a few tweaks to my ETF model portfolio. Here are my 5 top buys for this week – including a leveraged consumer ETF that will super-charge any gains in the retail sector.

SPDR S&P China (NYSE: GXC) – China raised capital requirements on banks sending Chinese stocks lower across the board. Will the move meant to stem inflation really put a crimp in growth? We’ve seen this act before. The knee jerk selling will be replaced by opportunistic buying. This week the GXC will recover most if not all losses from last week’s action.

ProShares Ultra Consumer Goods (NYSE: UGE) – Black Friday is coming and look for stores to be packed. It is no coincidence that many consumers are already getting in line for the action. I absolutely love this time of year as an investor and I will be purposely aggressive with this leveraged ETF that provides exposure to the consumer retail space.

SPDR S&P Semiconductor (NYSE: XSD) – The pincer of the retail tsunami will be the electronic space. Look for computers of all kind to sell like hotcakes. I expect the semiconductor space to rally as electronic gear flies off the shelves. Could we see a resurgence in PC sales? The holiday season will be the kicking off point.

ProShares Russell 2000 (NYSE: IWM) – For diversification purposes we’ll keep our exposure to the small cap stocks. A rising tide lifts all boats and smaller companies will benefit from the festive spirit about to descend upon the market. If you are bullish on stocks you can beat the market by holding this ETF of small companies.

ProShares Short S&P 500 (NYSE: SH) – With the aggressiveness ramped up a bit this week we can temper the enthusiasm by keeping the S&P 500 inverse ETF in our portfolio. No need to go all in especially with an absolute return approach to the market. This position will help ease the pain in case the Santa Claus rally fails to materialize.

Keep your portfolio equally weighted with each of these five positions. Last week we managed to gain a fraction with the market being down a fraction. The 100,000 dollar portfolio is up +6.3% over the last 8 weeks handily beating the market and well above the zero mark.